- The Bank of England raised its benchmark interest rate to 5.25% despite a slowdown in consumer-price rises, leading to speculation about when the central bank will end its monetary tightening.
- House prices in Britain fell by 3.8% in July compared to the same month last year, the sharpest decline since July 2009, but the average house price was still higher than earlier this year.
- The Bank of Japan raised its cap on the yield of Japanese ten-year government bonds from 0.5% to 1%, causing the yield to soar to nine-year highs.
- Turkey's annual inflation rate increased to 47.8% in July, the first rise since October, due in part to a new tax on fuel.
- The euro area's economy grew by 0.3% in the second quarter, with much of the growth attributed to changes in intellectual property shifting by multinationals based in Ireland for tax purposes. Germany's GDP growth rate was zero, and Italy's fell by 0.3%.
The U.S. economy is forecasted to be growing rapidly, which is causing concern for the Federal Reserve and those hoping for low interest rates.
The US economy has exceeded the Federal Reserve's estimate of its growth potential in recent years, with growth averaging 3% under President Joe Biden, but concerns about rising public debt and inflation, as well as the Fed's efforts to control them, may lead to slower growth in the future and potentially a recession. However, there are hints of improving productivity that could support continued economic growth.
The majority of Americans are unable to pay off their credit card debt in full each month, with 51% of individuals rolling over their balances and accruing interest, according to a survey by J.D. Power. This marks a significant shift from previous years and is attributed to factors such as inflation, dwindling savings, rising interest rates, and increased everyday use of credit cards.
Despite initial predictions of a recession, the U.S. economy has experienced unexpected growth, with high consumer spending and continued borrowing and investment by businesses being key factors.
The U.S. economy continues to grow above-trend, consumer spending remains strong, and the labor market is tight; however, there are concerns about inflation and rising interest rates which could impact the economy and consumer balance sheets, leading to a gradual softening of the labor market.
U.S. economic growth may be accelerating in the second half of 2023, defying earlier recession forecasts and leading to a repricing of long-term inflation and interest rate assumptions.
The majority of economists polled by Reuters predict that the U.S. Federal Reserve will not raise interest rates again, and they expect the central bank to wait until at least the end of March before cutting them, as the probability of a recession within a year falls to its lowest level since September 2022.
The Federal Reserve faces new questions as the U.S. economy continues to perform well despite high interest rates, prompting economists to believe a "soft landing" is possible, with optimism rising for an acceleration of growth and a more sustainable post-pandemic economy.
The US economy continues to perform well despite the Federal Reserve's interest rate hikes, leading to questions about whether rates need to be higher and more prolonged to cool inflation and slow growth.
Consumer spending growth is slowing as the economy stabilizes, with consumers prioritizing essential purchases and adjusting their spending habits in response to rising interest rates and financial pressures.
Despite predictions of a slowdown, the American economy continues to show strong growth, with recent data suggesting annualized growth of nearly 6% in the third quarter; however, concerns about overheating and potential inflation, as well as increasing bond yields, raise doubts about the sustainability of this growth.
Despite reaching record levels of total credit card debt and household debt, Americans are actually managing their debt better than in the past due to inflation masking the impact on balances and lower debt-to-deposit levels, according to an analysis by WalletHub. However, the rising trajectory of credit card debt and the increasing number of households carrying balances raise concerns, especially considering the high interest rates, which can take more than 17 years to pay off and cost thousands of dollars in interest. Meanwhile, savers have the opportunity to earn higher returns on cash due to higher inflation and interest rates.
Consumer debt, including auto-loans and credit card balances, is increasing in the United States, but strong government intervention and temporary relief measures have created a cushion of extra cash savings, leading to a positive outcome for Bitcoin (BTC) according to Cointelegraph analyst Marcel Pechman.
Spending on AI could boost GDP and productivity, while also potentially raising interest rates in the coming years.
U.S. economic growth, outpacing other countries, may pose global risks if the Federal Reserve is forced to raise interest rates higher than expected, potentially leading to financial tightening and ripple effects in emerging markets.
The US economy is expected to slow in the coming months due to the Federal Reserve's efforts to combat inflation, which could lead to softer consumer spending and a decrease in stock market returns. Additionally, the resumption of student loan payments in October and the American consumer's credit card addiction pose further uncertainties for the economy. Meanwhile, Germany's economy is facing a contraction and a prolonged recession, which is a stark contrast to its past economic outperformance.
The second quarter of 2023 saw a consistent rise in borrowing among Canadians, with subprime borrowers experiencing the highest increase in credit balances due to higher spending habits and elevated interest rates on variable-rate loans. Demand for new credit also grew significantly, leading to a total Canadian household debt of $2.3 trillion.
The US economy grew at a slower pace in the second quarter than previously estimated, which is seen as a positive sign for the Federal Reserve's efforts to cool demand and curb inflation.
The U.S. economy grew at a 2.1% annual rate in the second quarter, showing resilience despite higher borrowing costs and a slight downgrade from the initial estimate of 2.4%, driven by consumer spending, business investment, and government outlays.
US consumer spending increased by the most in six months in July, driven by strong demand for goods and services, but slowing inflation rates suggest that the Federal Reserve will keep interest rates unchanged next month.
Consumer spending is driving third-quarter GDP growth, but unsustainable spending habits, tightening lending standards, and the depletion of pandemic savings may lead to a decline in consumer spending in early 2024.
Consumer prices in the US rose 0.2% from the previous month, and 3.3% annually, indicating persistent high inflation and posing a challenge to the Federal Reserve's efforts to curb it; core prices, which exclude food and energy, also increased 0.2% from the previous month and 4.2% from the previous year.
Credit rating agency Moody's has raised its 2023 U.S. economic growth forecast to 1.9% while cutting its estimate for China, citing mounting challenges for the latter, including weak business and consumer confidence and an aging working population.
The U.S. is currently experiencing a prolonged high inflation cycle that is causing significant damage to the purchasing power of the currency, and the recent lower inflation rate is misleading as it ignores the accumulated harm; in order to combat this cycle, the Federal Reserve needs to raise interest rates higher than the inflation rate and reverse its bond purchases.
Top economist David Rosenberg predicts that the US will experience a recession within the next six months due to the aggressive interest rate hikes by the Federal Reserve and the erosion of credit quality in credit card debt.
Americans are struggling to pay their bills as inflation rises, leading to a surge in credit card and auto loan defaults, which is expected to worsen with rising interest rates and the expiration of the student loan moratorium. Low- and middle-income earners are particularly affected, resorting to using credit cards for essential purchases, while opening new lines of credit to pay off debts, resulting in record-high credit card debt. The resumption of student loan payments and potential holiday season spending add to concerns about escalating debt levels.
The U.S. economy is expected to expand at a 2.2% annual rate in the current quarter, according to a real-time estimate from the New York Federal Reserve, which is lower than the Atlanta Fed's estimate of 5.6% growth; the strength of the economy will impact the Federal Reserve's decision on interest rates and inflation.
The U.S.'s national debt has reached nearly $33 trillion and while debt has its uses, concerns are rising about its impact on the economy, particularly as the debt-to-GDP ratio nears 100%.
The US consumer is predicted to experience a decline in personal consumption in early 2024, which could lead to a potential recession and downside for stocks, as high borrowing costs and dwindling Covid-era savings impact household budgets.
The Wall Street Journal reports a notable shift in the stance of Federal Reserve officials regarding interest rates, with some officials now seeing risks as more balanced due to easing inflation and a less overheated labor market, which could impact the timing of future rate hikes. In other news, consumer credit growth slows in July, China and Japan reduce holdings of U.S. Treasury securities to record lows, and Russia's annual inflation rate reached 5.2% in August 2023.
The Federal Reserve is expected to cut interest rates by about one percentage point next year as economic growth slows and unemployment rises, according to chief economists at major North American banks.
U.S. consumers have accumulated $43 billion in additional credit card debt during Q2 2022, three times the average amount since the Great Recession, and credit card interest rates have soared to over 20%, raising concerns about the impact of inflation and rising interest rates on consumers' ability to pay off their balances. However, some economists argue that higher wages are helping consumers keep pace with their debt, and the overall rate of charge-offs remains low. Nonetheless, the combination of spent-down pandemic savings and the resumption of federal student loan payments could pose challenges for lower-income borrowers and hinder consumer spending.
UK gross domestic product (GDP) fell by 0.5% in July, below expectations, with services output being the main drag on the economy, indicating a potential mild recession, and causing investment banks to revise down their growth forecasts; however, some experts still believe that the economy is growing, albeit at a slower pace.
With 525 basis points' worth of cumulative Federal Reserve rate hikes in the books, the U.S. economy may still not be completely out of the woods, but signs are pointing to another positive performance for third-quarter real gross domestic product (GDP).
The global debt-to-GDP ratio has decreased for the second consecutive year, but the decline may be coming to an end as the post-COVID growth surge fades, according to the International Monetary Fund (IMF). China and the United States both have high debt-to-GDP ratios, and the IMF has called for strategies to reduce debt vulnerabilities in various sectors.
The US Federal Reserve holds interest rates steady at 5.25% to 5.50%, projects higher rates for next year, and expects stronger economic growth, causing a slight drop in Bitcoin's price.
The U.S. Federal Reserve kept interest rates steady but left room for potential rate hikes, as they see progress in fighting inflation and aim to bring it down to the target level of 2 percent; however, officials projected a higher growth rate of 2.1 percent for this year and suggested that core inflation will hit 3.7 percent this year before falling in 2024 and reaching the target range by 2026.
The Federal Reserve has paused raising interest rates and projects that the US will not experience a recession until at least 2027, citing improvement in the economy and a "very smooth landing," though there are still potential risks such as surging oil prices, an auto worker strike, and the threat of a government shutdown.
Credit card interest rates have reached historic highs, with the average rate hitting 20.68% in May, leading to concerns about the potential snowball effect and long-term financial consequences for consumers.
